"JetBlue Board Pushes Out Founder Neeleman"

Thursday, May 10, 2007

JetBlue Board Pushes Out Founder Neeleman 
BY JOHN WILEN 
The Associated Press 


NEW YORK -- JetBlue Airways Corp. replaced founder David Neeleman as CEO
less than three months after operating snafus essentially shut down the
carrier for days and frayed relations with customers.

The airline on Thursday appointed President Dave Barger as its new chief
executive, effective immediately. Neeleman had been chief executive since
1998 and will retain his role as chairman.

Neeleman said the change came at the request of the company's board, which
wanted to separate the CEO and chairman jobs.

"It's just really good governance, to separate the chairman and the CEO
role," Neeleman said.

The move comes after storms on Valentine's Day and St. Patrick's Day
essentially shut JetBlue down, forcing the cancellation of nearly 1,700
flights and stranding thousands of travelers throughout the Northeast.

To prevent a recurrence, JetBlue drafted a "customer bill of rights," under
which the company now issues vouchers to some customers who experience
delays.

The canceled flights and vouchers cost JetBlue $41 million, contributing to
the company's first quarter loss of $22 million, or 12 cents a share. That
was an improvement over the year-ago quarter, but was less than analysts had
originally expected.

Last month, JetBlue lowered expectations for the rest of the year.

Despite the timing, Neeleman said the change at the top isn't a direct
result of JetBlue's problems in February and March. He characterized it as
"a natural evolution" of JetBlue's leadership structure.

"I think the board has been talking about this for a long time," Neeleman
said.

Ray Neidl, an analyst at Calyon Securities, said the change isn't
surprising. JetBlue has been consistently "rotating" new managers into the
company in recent quarters, he said.

But one can't ignore the impact of JetBlue's fumbled response to the storms
earlier this year, he said.

"That was probably the final straw" for Neeleman, Neidl said.

Neeleman conceded that JetBlue's hiring of Russell Chew as chief operating
officer in the aftermath of the storms may have accelerated the timing of
the CEO change. Chew's presence allowed Barger to focus less on day-to-day
operations and more on managing the entire company, which in turn freed
Neeleman to return to his roots as a corporate strategist.

"An entrepreneur comes in and he founds the company and then it gets going,"
Neeleman said of himself. But then, he said an entrepreneur finds himself
operating a growing, complicated business - which is not his strong suit.
JetBlue operates more than 575 flights daily to 52 destinations.

"It's always tough to kind of let it go," Neeleman said.

Barger, 49, will retain his role as president. He joined JetBlue as
president and chief operating officer shortly after Neeleman founded the
airline in 1998.

"It really is very natural," Barger said of the change. "It's part of the
life cycle of the company."

Neeleman said the subject of any change in his compensation did not come up
with the board. Neeleman made $257,672 last year in salary and other
compensation, according to Securities and Exchange Commission filings.
Barger made $521,998.

Neeleman, who owns about 10.8 million JetBlue shares, or 6 percent of those
outstanding, said he's not worried about whether he will continue to draw
his salary, which he says he regularly donates to a catastrophic fund for
JetBlue crewmembers. Of Barger, Neeleman said: "He probably needs to get a
raise."

Shares of JetBlue rose 49 cents, or 4.7 percent, to $10.89 in midday
trading. The stock is off 36 percent since mid-January, when it hit an
intraday high of $17.02.

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